CHAPTER 1: INTERNAL CONTROLS
Once the policies and procedures are written, a schedule should be created to make sure they are reviewed periodically to ensure that they remain optimum. Regulations, acceptable common practices, the needs of the organization, and especially technology all undergo change, and the policy manual should reflect those changes. For example, in the U.S., the Sarbanes-Oxley Act mandates audits of organizations to ensure that what is actually taking place within the organization is accurately reflected in its written policies and procedures. But whether an audit is on the horizon or not, it is a good idea to periodically compare written policies and procedures to what is actually taking place so that either the policies and procedures can be modified to reflect reality or activities that are not in line with the guidelines can be identified and corrected. When sales, billing, and AR reside in separate silos and—as is the case in many organizations— maintain a somewhat adversarial relationship, small problems can quickly escalate into larger problems and increase risk. Rather than point fingers at the other departments, pulling the procedure and making recommendations to improve the process is a much more productive and less stressful way to handle these situations.
1.8 Audit and Key Terms
Internal and external audits are important to the well-being of companies and in many countries are mandated by law. We can no longer wait for the Internal Audit Department or outside auditors to tell us where there might be inadequate controls. With the help of technology, fraudsters have the ability to stela from organizations by procuring realistic documents or by determining where controls are weak or lacking – and taking advantage. Today it is every employee’s job to protect the assets of the company. Be aware of mundane and tedious audit tasks that need to be reviewed to find irregularities, since these tasks may have lost their true value and are sometimes dropped from review or are just approved without review. Anytime your name is signed to a document, especially an audit, you are certifying that you personally have validated the information, and your signature is an approval that the data is, in fact, accurate. To keep internal controls tight and maintain a compliant process, it is critical to ensure that staff policies and procedures are up to date. It is also essential to educate staff on: the importance of auditing their own work before moving to the next step; common fraud schemes; and what to look out for (“red flags”) that might signal irregularities.
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THE ACCOUNTS RECEIVABLE SPECIALIST CERTIFICATION PROGRAM E-TEXTBOOK
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